Hyde Park Properties for Development was initially established under the name Damac Properties in 2007. Then in 2009, the Housing and Development Bank (HDB) and the Egyptian Arab Land Bank acquired 60% of the shares. Later in 2011, the company’s name was changed to Hyde Park Properties for Development after the two banks acquired 82.22% of the total shares. This was compounded by an increase in the company’s capital, and in May 2013, the New Urban Communities Authority (NUCA) presented itself as the strategic partner instead of Damac.
In an interview with Daily News Egypt, CEO Amin Serag said that the company’s future expansion plans include expansions in 6th of October City, the North Coast, and Hurghada.
What are the details of the nine tenders that the company offered in August to speed up construction and finishing?
The company faced some problems which caused delays in delivery. While the company managed to solve all these problems, in order to also overcome the delays and guarantee the delivery of the units in 2018 and 2019, the company offered these nine tenders. These tenders are offered to companies to finish residential units, buildings, villas, townhouses, roads, and other facilities needed inside the projects with the aim of finishing all construction work by the end of 2017.
The company has awarded four of these tenders so far; the fifth will be awarded imminently and the rest after Eid Al-Adha. The companies that Hyde Park has contracted with for these tenders achieved grade A assessments.
How much are these nine tenders worth?
The first four contracts amount to EGP 300m over two phases, with the first phase valued at EGP 180m and the second EGP 120m. The fifth tender is worth EGP 70m. The last four tenders that we have yet to award to companies amount to EGP 480m.
What is the value of the construction contract the company targets for fiscal year (FY) 2016/2017?
Overall, the company targets about EGP 1bn for 2016/2017.
What are the company’s plans for expansion?
We are currently developing our main project, Hyde Park New Cairo—a huge project on 1,500 acres.
Our future plans involve expansion in 6th of October City, the North Coast, and hopefully Hurghada. Negotiations are currently underway.
For other governorates, we are willing to launch our business there; once we find good opportunities we can start immediately.
What is the value of Hyde Park’s land bank?
Our land bank is 6m sqm (1,500 acres). According to the price guide from the latest auction for plots of land in Fifth Settlement at EGP 4,000-5,000 per sqm, the estimated value of our land bank is about EGP 24bn.
Is the New Administrative Capital’s proximity to your project considered a challenge to the company’s business?
On the contrary, the New Administrative Capital is considered advantageous for our projects as it will develop the area surrounding our project and increase traffic to the area. We expect that the company will have to coordinate with the concerned authorities as our project’s office buildings are very close to the New Administrative Capital, which would benefit us.
Does the company intend to participate in the New Administrative Capital’s projects?
We are considering becoming involved in this project and are studying the New Administrative Capital’s masterplan. If the company did participate, we would be involved in residential and administrative units.
What is your opinion about the New Urban Communities Authority (NUCA) offering land at high prices?
NUCA doesn’t offer land at high prices but rather abides by the market price, which is high. Some people previously acquired land very cheaply and bought them at very high prices, which are considered to be fictitious gains in the sector. Nevertheless, nowadays NUCA or the Ministry of Housing offers more land in different areas according to the market price, which is determined by supply and demand.
Dubai, for example, is a successful model in real estate investments as services and land are bought for their actual value, thus the market doesn’t sustain losses.
What is your evaluation of the shortage in US dollar reserves and how has it affected the company’s business?
This is an issue for all sectors in the Egyptian market; however, it has helped to develop the real estate sector. People were worried about the depreciation of the Egyptian pound, which led to increased demand on the real estate sector as it is considered a safe haven.
I think that real estate companies can’t complain about the increase in the value of the US dollar because this led to a relative increase in their sales.
What were the company’s sales as of the end of the first half of 2016, and what are the targeted sales for the year’s end?
We exceeded EGP 1bn in sales during the first half of 2016.
We expect this to reach EGP 2bn by the end of the year, compared to EGP 1.2bn achieved in 2016—an increase of 40%.
Do you think that Egypt’s real estate sector could be considered a ‘real estate bubble’?
I don’t think so because Egypt’s population is huge, with more than 90 million citizens. However, the real worry is the slowdown in the economy in general, alongside the US dollar crisis and the general situation of the country’s economy.
These factors may affect the ability of the client to pay instalments on projects, though this is nothing new. All real estate developers specify an annual percentage for these potential losses; however, this rate could still increase this year or the year after.
The real estate community consists of three categories or tranches: A, B, and C.
People always say that tranche A, which is above middle-income, is saturated; but tranche B in Egypt, which is the middle-income bracket, constitutes a great demand on real estate with no less than 20 million citizens.
I believe that the real estate sector will keep growing; however, the main challenge is the supply of government-provided facilities and utilities, such as water, electricity, and other services.
For example, in some areas in Fifth Settlement there are issues with some facilities, especially water.
What are the opportunities and the challenges for the real estate sector in Egypt?
The sector is fortunate to be in great demand and be profitable. Moreover, the demand on real estate property will only increase as we are a growing population.
One of the challenges is proper expansion, which is considered a shortcoming on the part of developers and the government, as 80% of real estate interests are concentrated in Cairo only and the remaining 20% are distributed across other areas such as Mansoura, Tanta, and Sohag. There is high demand on these areas outside Cairo but facilitations and utilities are needed for investment opportunities. Further, there is a lack in available land in these areas, especially the Delta region.
What is your opinion regarding the partnership between the government and developers for connecting land with water, electricity, and sanitation services?
I think the government is expanding in this approach—there are some successful examples of land being connected to fundamental services in partnership with the private sector. For example, the Suez Canal Area Development Project was completely developed by the government and the private sector.
What is the size of the administrative buildings being developed inside Hyde Park New Cairo?
The size of the administrative units project is 500,000 sqm. A British company developed its masterplan and we will launch its first phase next year with investments of EGP 200-300m. After that phase, the company will offer companies to collaborate with us and develop the land inside the project by way of partnerships.
What is the company’s plan for delivering units and offering new units?
The company is currently delivering clusters 1 and 3 of Hyde Park New Cairo’s first phase.
After Eid Al-Adha, the company will launch the Park Corner phase—a residential project, which was developed by a British company with new, varied products.
What is the size of Hyde Park Mall and were there any problems in its implementation?
There weren’t any problems in implementing the project but we did have to revise the building height with government agencies, as well as reviewing the mall design with CDM, a Canadian consultant.
The mall is 480,000 sqm and the leased area will be 103,000 sqm, containing more than 400 shops. This mall will be the biggest in Cairo.
Negotiations are underway with some mall operators and the mall will be launched after we have concluded agreements with them. I expect this to be after 2017.
What is the volume of targeted sales?
The company targets EGP 3bn in sales by the end of the coming year.
Does the company intend to take out any loans?
The company’s financial situation is very good and we will take out loans if the company acquires new lands as part of its expansion plan, but for now we don’t need any loans.
What growth rate do you expect for the real estate sector?
Taking into consideration the recent approval of the value-added tax draft law, the foreign currency shortage, and the US dollar’s appreciation, I expect an increase of 5-7% as part of the sector’s natural growth.